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Richard Schmalensee, Dec 16, 2009
In an important recent paper, Joseph Farrell and Carl Shapiro propose a new quantitative approach to assessing the competitive impact of horizontal mergers that does not involve defining a relevant market. I believe that Farrell and Shapiro have made a significant contribution that has the potential to improve merger enforcement. In what follows I describe their approach, propose a slight modification, and note that, like any purely quantitative technique, it must be used with care and common sense.
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